Written evidence from the Centre for Local
Economic Strategies
1. SUMMARY
1.1 This paper summarises CLES' thoughts
about Local Enterprise Partnerships (LEPs) based on our discussions
with CLES members and CLES consultancy clients. We have also had
the chance to review several of the draft submissions for LEPs
and hear about the experiences of local councils as they negotiate
the arrangements for the potential LEPs in their areas, through
our local economic network.
1.2 In recent years, local authorities working
collaboratively and with partners in the private and social sector
have developed strong and effective governance arrangements in
many areas. To a large extent, the development of LEPs will evolve
from these existing structures, partnerships and networks. However,
the cuts in public funding for regional development will mean
that these partnerships will have to work with fewer financial
and human resources.
1.3 As the Government has already identified
in their consultation on the Regional Growth Fund, the economy
of the UK is unbalanced with a significant north—south productivity
gap. In addition, we still have many areas with extremely high
levels of deprivation. In a time of public sector austerity, CLES
believe that LEPS should be targeted on those areas which have
the greatest challenges. These challenges have traditionally included:
high levels of long term unemployment; low levels of investment
and enterprise; poor skills; and poor health. However, LEPS will
also be important in more prosperous areas which different challenges,
for example, transport management and/or housing in Cambridgeshire.
In addition, in order to help rebalance economies that are dependent
on public employment, a key criteria for selecting LEPs could
be based upon the level of public sector funding cuts and public
sector redundancies taking place in a locality. As our recent
research has shown, many areas may be lose proportionately higher
numbers of public sector employment and will therefore need support
from LEPs in order to help stimulate private sector jobs growth
and rebalance the local economy.
1.4 By their very nature, LEPs will need
to be flexible according to the particular needs and challenges
of a locality. An LEP in the East of England may differ significantly
to an LEP in Yorkshire and Humber as the economic geographies
and challenges are specific to each area. LEPs must not be restricted
neither by administrative area, nor by a rigid view of functional
economic geographies.
1.5 LEPs must include, not just the public
and private sectors, but crucially need to acknowledge and support
the important role of the community and voluntary sector in supporting
the economy, particularly in those areas where the private sector
is relatively weak. The community and voluntary sector can make
up the "social economy" helping to develop a culture
of entrepreneurship, civic price and enterprise development which
can, over time, strengthen and rebalance the profile of an economy.
1.6 Although we acknowledge the importance
of involving the private sector in LEPs, we believe that the condition
of private sector chair is too rigid. LEPs should have the option
of being able to appoint a public sector chair, which can provide
strong accountability, something identified as being a limitation
of RDAs.
1.7 LEPs will need to be supplemented by
other support from government to address wider issues that limit
economic growth in our communities and which previous area based
schemes have attempted to address. This work on supporting communities
through education, health and well-being, housing and capacity
building, must continue.
2. THE FUNCTIONS
OF THE
LOCAL ENTERPRISE
PARTNERSHIPS
2.1 CLES think that LEPs should have the
overall function of developing resilient places in the future.
These places should operate successful both environmentally and
socially. CLES' definition of resilience is, "the capacity
of a place to be ready to deal with change and opportunity. This
will require an adaptability so a place can respond, take advantage
and learn, so that the place and its citizens are better equipped
to deal with opportunities and negative change in the future."
The resilience of an area will depend on the level of economic
performance and preparedness. These are important factors which
CLES has been researching in detail in partnership with seven
areas across the UK (Manchester, Gloucester, Cambridgeshire and
West Suffolk, Ashfield and Mansfield, Northumbria, Cherwell and
South Staffordshire.). We would be happy to provide more information
about our research to the committee.
2.2 LEPs will fulfil this function by doing
a range of things including:
— Targeting activity and resources on those
areas with the most serious regeneration challenges;
— Supporting the development of effective
networks or partnerships between the public, private and social
sector within a functional economic geography;
— Planning and delivering projects that
will help to rebalance local economies by encouraging the growth
of new enterprise and employment opportunities from both from
the private and social sectors;
— Develop and maintain strong evidence
base which identifies regeneration challenges and economic opportunities
for the future. This ensures that resources are prioritised and
targeted effectively; and
— Successfully co-ordinating cross authority
projects which help stimulate economic growth.
2.3 Whilst general guidance on the overall
function and purpose of LEPs is useful, it is likely that there
will be have to be flexibility on how LEPs are established locally.
This flexibility is important because LEPs will vary depending
on the size and shape of the functional economic geography and
the existing networks and partnerships which are already in place.
Some areas may adopt a strong city regional structure, for example,
Manchester or Liverpool, whilst others may need to explore a structure
based on a dispersed economic geography, particularly in rural
areas.
2.4 Although building upon this legacy of
partnership working will be important, it is crucial that LEPs
learn from the limitations of these past structures to maximise
their effectiveness in the future. This is particularly in relation
to democratic accountability, private sector engagement and recognition
of the importance of the community and voluntary sector for supporting
local economies.
2.5 Guidance on LEPs to date suggests that
LEPs should be chaired by the private sector as a rule. However,
CLES would be a strong advocate for LEPs to be chaired, not only
by private sector representatives but also by representatives
from the public and social sector also. Our recent work with Yorkshire
Cities showed the very proactive role that the public sector played
in response to the recession. There is strong evidence from this
work of local authorities working together to tackle job cuts
and redundancies across functional economic geographies and of
helping to co-ordinate activity to target those communities who
were most at risk. Specific examples from CLES' research with
Yorkshire Cities include:
— Calderdale Borough Council have been
working to anticipate current and future cuts in the banking sector
in their locality and have been proactively working with the private
sector to explore new employment and investment opportunities;
— In early 2009 news broke that Corus Engineering
Steels would lose up to 700 of their personnel from their South
Yorkshire sites. A partnership involving Yorkshire Forward, Jobcentre
Plus, LSC, Rotherham Metropolitan Borough Council, Barnsley &
Rotherham Chamber, Business Link Yorkshire and Communities, the
employees' trade union, worked with the employer to ensure that
the support available to both the individuals and the company
was maximised. To do this, a resource centre was set up on site
at Corus Steelworks—Aldwarke (Rotherham), manned by Jobcentre
Plus staff;
— Yorkshire Forward established a Transitional
Loan Fund (TLF) to offer financial support to viable businesses
that were experiencing a working capital shortfall due to difficulties
in accessing corporate finance. Prompt action helped viable businesses
with strong order books to safeguard jobs and to trade through
the recession; and
— Sheffield City Council has introduced
a specific seven point plan for the recession in partnership with
Jobcentre Plus, the Learning and Skills Council and Yorkshire
Forward. This plan is aimed at those individuals in the city made
redundant as a result of the economic downturn and those employers
similarly affected; it does not replace but adds value to the
city's existing Employment Plan which aims to address the problem
of long term worklessness, and the barriers faced by those vulnerable
groups furthest from the labour market.
2.6 LEPs do represent an opportunity for
local authorities to be bold and ambitious for their localities.
There are important lessons that we can learn from private-public
partnerships internationally and CLES's current research with
the Norfolk Trust Fellowship has highlighted interesting examples
of where LEP type structures can be used to lever investment,
employment and innovation into localities which we would be happy
to share with the select committee as examples of what can be
achieved through effective partnership.
3. THE REGIONAL
GROWTH FUND
AND FUNDING
ARRANGEMENTS FOR
LEPS
3.1 We support the aspiration of the Regional
Growth Fund in seeing to rebalance the nature of the UK economy
both sectorally and spatially. With the dissolution of Regional
Development Agencies (RDAs), LEPs must play a crucial role in
helping to support future growth.
3.2 LEPs should be able to have the option
of securing additional funding and powers from central government
to co-ordinate activities such as business support, sector leadership,
business capital and investment if these functions are shown to
be crucial for their future economic plans and/or where they already
have a strong track record in undertaking this type of activity
in their area.
3.3 LEPs should recognise the importance
of the social economy in functional economic geographies. This
is particularly important in those areas where the private sector
has traditionally been weaker. The social economy provides employment,
investment and links to the supply chain with the public and private
sectors.
4. ARRANGEMENTS
FOR CO
-ORDINATING REGIONAL
ECONOMIC STRATEGY,
STRUCTURE AND
ACCOUNTABILITY
FOR LEPS
4.1 Although the structure of LEPs is important,
it is crucial that there is first clarity about the function of
LEPs so that form follows function. However, in the spirit of
localism, localities themselves should be responsible for agreeing
the precise function of their LEP to suit the particular needs
of an area.
4.2 Because of the collaborative nature
of LEPs, their emerging structures are, and will continue to evolve,
from existing networks and partnerships established through initiatives
such as the Multi Area Agreement process, city regions, discussions
on the development of Local Economic Assessments and existing
sub regional partnerships which have been supported through RDAs.
It is important that LEPs learn the lessons from the weaknesses
of these previous structures, particularly in relation to accountability.
4.3 However, where previous structures and
networks, for example, MAAs, do not exist, the process of developing
an LEP may be more difficult as the networks and linkage between
partners will not yet exist to the same extent as those in areas
with a history of partnership working or with very well defined
functional economic geographies.
4.4 With the dissolution of RDAs, there
is a risk of a strategy and policy vacuum and therefore there
needs to be as smooth a transition to the new arrangements for
LEPs as soon as possible. This is important from not only local
government's point of view, but from the perspective of the private
and social sectors who have become accustomed to the current regional
and sub regional structures.
4.5 There is also a great deal of research
about the shape and structure of the economy in the regions. In
the North West for example, a great deal of sophisticated work
has been done exploring the potential of the low carbon economy
and it is important that the importance and quality of this work
is not underestimated. In a time of financial austerity, LEPs
should build upon this strong evidence base to inform the development
of new initiatives in their localities. LEPs can use the regional
economic strategies, draft regional strategies (as in the North
West) and Local Economic Assessments to inform their work.
4.6 Although focused on economic growth,
LEPs must be cogent of the clear linkages between successful economies
and wider place policy, for example, the relationship between
economic development and housing, health and spatial planning.
Any LEP which does not recognise these links is unlikely to be
successful.
4.7 It is important that the structures
of LEPs are neither restricted to administrative boundaries but
nor to a one dimensional view of "functional economic geographies".
LEPs must be open minded and flexible. Although an awareness of
the current geography of your economy is important, CLES thinks
that the current pre-occupation with a single "functional
economic geography" can be potentially limiting as no one
area will work within a single functional economic geography,
for example, an area like Barnsley has a economic geography which
looks both to Leeds and to Sheffield. Similarly the perception
of business is not limited by functional economic geography but
instead relates to markets, the scope of which is likely to be
global and changing on a regular basis.
4.8 In some areas, LEPs should work together
to co-ordinate their activity, particularly if they are building
on the evidence base from previous regional economic strategies.
To do this they may want to consider the establishment of LEP
co-ordination groups across an area. There may also be an argument
for a national LEP network which provide the opportunity for leads
from these LEPs to meet on a regular basis to share ideas, projects
and lessons learned to date. CLES would be happy to assist with
this process through our local economic network and our member
network.
4.9 In the medium to longer term, not all
areas will be covered by an LEP because some areas may choose
not to apply to establish an LEP, some areas may not have the
capacity nor political will to make the LEP work, whilst other
places may not be successful in their proposal. Therefore, consideration
must be given to what else will help to direct economic development
and regeneration and rebalance the economy in these areas particularly
in relation to deep entrenched regeneration challenges.
5. ABOUT THE
CENTRE FOR
LOCAL ECONOMIC
STRATEGIES (CLES)
5.1 The Centre for Local Economic Strategies
(CLES) is the leading membership based organisation in the UK
which is dedicated to economic development, regeneration and local
governance. Founded in 1986, CLES is a unique independent thinking
and doing organization with charitable status. CLES combines a
thinking policy research element alongside a doing consultancy
trading arm. In all of CLES' work, the challenge of delivering
local economic development alongside progressive environmental
and social benefits is a common theme.
August 2010
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